ConocoPhillips cuts North America spend, including Alaska, as oil drops again - Must Read Alaska
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Wednesday, August 5, 2020
HomeTop NewsConocoPhillips cuts North America spend, including Alaska, as oil drops again

ConocoPhillips cuts North America spend, including Alaska, as oil drops again

ConocoPhillips is curtailing spending and production, cutting 225,000 barrels a day from its North America wells, as the price of oil drops and as the world is running out of places to store it.

Alaska North Slope crude oil traded under $16.65 a barrel, reaching lows not seen since 2002. North American producers have seen a 30 percent drop in demand and nearly a 70 percent drop in prices since January.

For Alaska, the announcement means the company will cut back another $200 million in planned investment.

Today’s announced actions include these points made by the company in a news release on its website:

  • An additional reduction in 2020 operating plan capital expenditures of $1.6 billion, bringing the current estimate to $4.3 billion. Including our previously announced reduction of $0.7 billion, this represents a total reduction in operating plan capital expenditures of $2.3 billion, or approximately 35 percent, compared to the 2020 announced guidance. These reductions are sourced from across our global portfolio, primarily focused on Lower 48, Alaska and Canada areas where we have the highest levels of flexibility.
  • A reduction in operating costs of approximately $0.6 billion, representing roughly 10 percent of the initial 2020 guidance. This brings the current estimate to $5.3 billion. These reductions were sourced from lease operating expenses, general and administrative costs and foreign exchange impacts.
  • The company’s share repurchase program has been suspended.
  • On a combined basis, the cumulative capital, operating cost and share repurchase actions represent a reduction in 2020 cash uses of over $5 billion versus original operating plan guidance.
  • The company also announced it will elect to curtail production in Canada and the Lower 48 regions until market conditions improve.
    • At Surmont, the company is currently cutting back production due to low Western Canada Select prices. By May, the company expects to reduce production by approximately 100,000 barrels of oil per day (BOD) gross to 35,000 BOD gross.
    • In addition, beginning in May, the company plans to begin curtailing production across its Lower 48 region. Initially, the company expects to curtail about 125,000 BOD gross. Curtailment decisions will be made on a month-to-month basis, and are subject to operating agreements and contractual obligations.
    • These announced curtailments represent approximately 200,000 barrels of oil equivalent per day (BOED) net to the company.
  • Given ongoing uncertainty, continued market volatility and the potential for both voluntary and involuntary curtailments over the coming months, the company’s previous 2020 guidance items should not be relied upon and further guidance will be suspended.

The announcement came about a week after the company announced it was demobilizing some of its drilling rigs and crews in response to the COVID-19 pandemic.

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Suzanne Downing had careers in business and journalism before serving as the Director of Faith and Community-based Initiatives for Florida Gov. Jeb Bush and returning to Alaska to serve as speechwriter for Gov. Sean Parnell. Born on the Oregon coast, she moved to Alaska in 1969.

Latest comments

  • Depression within a few weeks. Do the numbers.

    • And the dominos fall.

  • And there’s a group that wants to raise their taxes…rigghhhttt. That makes sense….

    • Those people are not just stupid, but profoundly stupid……

  • Watch the state hire workers give raises and create new departments to study the money shortfall and how to fleece the remaining workers. I see this state going broke as soon as they spend to 60 billion which will take 5 years or so.

  • It will be a good day in Alaska when the government needs to hold a bake sale to pay out per deim to Legislators and their staff.
    Eventually the federal government will be told by the IMF that they cannot print money forever.
    End the Corona heist and put America back to work before it is too late.

    • We don’t need no stinking INF man!

  • North Slope can’t do this much longer without laying alot of folks off for an undetermined amount of time… Then we have even more folks out of work.. Yup a depression is coming…

  • They helped AK more than the cruise industry by more than 10 fold. It’s a shame to see them go.

    • The cruise industry only helps itself.

  • This and tourism zeroing out–wake up legislators! Where’s the op $ for next year coming from–it ain’t!!!

  • The final kill shot? Let the wailing and gnashing of teeth begin.

  • Time to find out who really wants to be in Alaska and who is here for purely economic opportunity.

    .

    Looks like Sourdough is back on the menu boys.

    .

    That and Sourbug. Sour on Alaska,l and can’t leave because the border with Canada is closed…

    • We’re gone soon. Going to miss some great people.

      • Will you stay with MRAK though, no matter where you’re at?

  • Well I was a casualty of the drop in crude prices. Lost my slope job 2 weeks ago until the price goes back up

    • Would you know, or can you find out if TAPS been stocking up on condensates and distillates, prepping for a shutdown and cold restart?

  • Just remember the sobbing and yelling that the vetoes of this current fiscal year state budget brought. Municipal lobbyists worked hard, along with the Municipal League to reverse the vetoes, and they were too successful – at our expense. Those legislators, those big spending liberals, those nonprofits on the public teat, and those public employee unions letting the liberal legislators suck the milk should have allowed the Governor to have his vetoes. Alaskans had the good luck to elect a common sense Governor but the bad luck to put big spenders in charge of the Legislature, so we are much poorer prepared today for this recession than we would have been had Legislators simply gone home last year and cursed the Governor. In this fiscal year we funded the ferries too much, Public Radio (!), school debt reimbursement, excessive Medicaid (the courts take some of the blame there), and an excessive BSA (the courts take blame here too). We need to demand that those Legislators return their salaries and per diem. We need to demand the municipalities to which we pay taxes have no paid lobbyists. We need to run the public employee union bosses out of the state.

    • Blame the freshman “conservatives” that threatened to abandon him if he didn’t allow good portions of those cuts to go back. The Giessels and the Imhoffs and the Dems all do what they do, but the ones that told him they were with him, and then caved? This is on them…maybe we will never know who they are but it wouldn’t hurt to ask. He only had a couple votes to spare on an override and the only logical explanation is that several of the newer legislators got scared.

  • If there ever was a time to limit spending to revenue, it’s now. It will take digging into savings to survive the loss of revenue for this year. The next couple years will be the telling ones. The effects of the Wuhan v could be felt for generations. The left will exploit every opportunity to turn tragedy into political gain. I believe the economic hits to Alaska are not over yet. Give it a couple or six months. Then the ‘dawning’ will begin. Americans/Alaskans must prevent the attempted leftist takeover of our state and country. Next thing you know, libs/leftists will want to arrest us for “being hungry and carrying a concealed sandwich”.

  • Ticks always abandon a dead deer when it cools off. Soon Alaska may be free of “ticks”.

  • For 2019 TAPS averaged 490,366 gross barrels per day. 225,000 barrels a day is near half! Not only is the price really down, but loss of half of the volume doubles the cash loss.
    Several articles have indicated that a 300,000 throughput is about the lowest TAPS can handle without having to shut it down. I think Alaska is in deeper Kimchi than we realize yet.

  • Odd there’s no mention of our good friends the Saudis and the Russians who together engineered the price drop that began the decline.

    No, it’s the evil leftists.

    Man are those leftists influential, they got the Russians and the Saudis to play along with the evil plan.

    Those leftists are something else, I hear they even control China too.

    Those leftists must be some all powerful super beings. being as though they are the root of all evil and they are the cause of every grievance.

    • bill,
      Takes one to know one.

      • I see,

        ….you’ve revealed that you’re a closeted leftist then because more often then not you’re the one who is claiming to know all about them.

        Glad you cleared that up for me.

  • The cheapest gasoline is close to one dollar per gallon in the Lower 48. When will Alaskans stop being gouged at the gas pump?

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